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SEZ developers urged to take in SMEs

“Private promoters keen on leasing out chunks of space at exorbitant rates to big players”

CHENNAI: Government agencies should prevail upon private developers of Special Economic Zones to earmark a portion for small and medium enterprises, B. Vijayan, Development Commissioner, MEPZ Special Economic Zone, said Tuesday.

Speaking on ‘Understanding SEZs’ at a function organised by the TANSTIA-FNF Service Centre, he said that in the absence of an initiative from government agencies, small and medium enterprises were facing the risk of being edged out of SEZs.

Pointing out that private promoters were more keen on leasing out chunks of space at exorbitant rates for big players, a most conspicuous trend in the IT segment, Mr. Vijayan urged State agencies to compel promoters to provide space at preferential rates for small and medium units.

A defining characteristic of the MEPZ that celebrates its silver jubilee next year was that 100 of the 108 players who had set up shop were small and medium units, with holdings ranging from 0.5 to 1 acre.

Half-way stage

India, which had framed an SEZ policy in 2000 and implemented the concept in 2003, was only at a “half-way stage,” as several bottlenecks and misconceptions were impeding these export enclaves from achieving potential. The southern States, he said, accounted for 44 per cent of 453 SEZs that had been formally approved. Tamil Nadu had 59 projects formally approved, 12 approved in principle and 33 operational.

However, despite the remarkable growth in jobs and foreign exchange, SEZs had of late come under criticism which, he said, was unfair in most cases but valid in some.

The most important bottleneck concerned land acquisition with a spate of controversies leading to a ban on State acquisition of any more land.

Tamil Nadu fortunate

Tamil Nadu, he said, was fortunate, as forward-looking policies adopted in the past had led to the availability of land previously earmarked for industrial centres.

According to Mr. Vijayan, another critical issue that stemmed from a fundamental conflict of interest between the Departments of Commerce and Finance concerned the trade-off between revenue gains in terms of jobs creation and foreign exchange earnings and revenue loss in terms of customs duty sops.

Investors often discovered that the promise of single window clearance remained on paper. In reality, a multiplicity of State Government departments was involved in issuing clearances.

“It would be simpler to task a single government agency with issuing all the necessary clearances,” he said.

Single agency

SEZs also lacked a single agency for inspection and investigation, resulting in intervention by a host of agencies, ranging from pollution control boards to local bodies.

Near impossible

However, tasking a single agency with this role would call forth a diversity of domain knowledge that, he felt, was near impossible to achieve.

Dispelling a misconception about large-scale displacement of farmers and mass appropriation of fertile land for SEZs, Mr. Vijayan said the aggregate farmland that would be displaced for all SEZs would be hardly 0.02 per cent of the cultivable land.

“However, acquiring prime agricultural land is something to avoid as the soil fertility characteristics are too unique to find elsewhere.”